Agatha Wu, 78, went on six holiday trips last year, five of them on budget carriers.

The former senior nurse said: "Budget carriers have made travel highly affordable for retirees like me. The strong Singapore dollar is also a great help.

"I can now go on three trips for less than the price of one trip 15 to 20 years ago," she added.

Singapore's first low-cost carrier Valuair took flight in May 2004. This was followed by Tiger Airways and Jetstar Asia several months later.

Budget airlines have also proliferated in the region, fuelled by demand from a burgeoning middle class in huge markets like Indonesia, China and India.

Airlines have been aggressively launching new routes and adding flights, as well as starting joint-venture carriers in other markets to expand their footprint.

From zero just over a decade ago, budget carriers now account for about 60 per cent of all intra-Southeast Asian travel, giving full-service carriers like Singapore Airlines a run for their money.

At Changi Airport, which handled more than 53 million passengers last year, low-cost carriers make up about a third of total traveller traffic and flights.

Three of Changi's top five passenger airlines last year were budget carriers - Tigerair (the rebranded Tiger Airways), Jetstar Asia and AirAsia. The other two were Singapore Airlines and its regional arm, SilkAir.

With more than 40 low-cost carriers in the Asia-Pacific battling for market share, fares have tumbled. This is great for travellers. But cut-throat competition has also slashed margins and yields for carriers.

From April last year to the end of March this year, Tigerair recorded its biggest annual loss of S$223 million (US$178 million). In March, it cancelled an order for nine single-aisle planes due to arrive this year and the next. Three weeks ago, it said it would ground eight planes this year - about 15 per cent of its total fleet - and cut loss-making flights.

Over at Jetstar Asia, chief executive Barathan Pasupathi says the past 12 months from June last year to now have been among the most challenging in the past decade. The tough year came after it managed a modest S$2.5 million after-tax profit in the previous financial year.

Asia's biggest budget carrier, AirAsia, has not been spared either. Last year, profits fell 55 per cent to 364 million ringgit (US$113 million) compared with 2012.

AirAsia X - the group's long-haul arm - lost 11.3 million ringgit between January and March. This contrasted with a profit of 50.2 million ringgit a year ago.

The biggest problem facing the industry today is overcapacity.

There are just too many budget carriers operating too many flights, said independent aviation analyst Shukor Yusof. Appetite for travel remains high but there are not enough passengers to fill all the extra seats airlines are flooding the market with, he said.

Last year, Tigerair boosted capacity by 27 per cent, but demand increased by just 13 per cent.

In hindsight, budget carriers grew too fast, too soon, said Associate Professor Terence Fan from the Singapore Management University. "The reality of the fact that supply can outpace demand is slowly being realised in at least several low-cost carriers in Southeast Asia."

In an environment where "the competition has become irrational", only the fittest will survive, said Brendan Sobie, Singapore-based analyst at aviation think-tank, Centre for Asia-Pacific Aviation.

Airlines are responding by moderating growth, even cutting capacity, hoping that this allows them to raise prices.

Tigerair has said it will ground planes this year. Jetstar Asia has suspended growth, said Pasupathi.

He said: "The operating environment in Singapore is extremely challenging with high fuel, intense competition and an oversupply of capacity all impacting our current financial performance...

"Until conditions improve, it is prudent that we suspend growth and focus on our existing network to 13 countries in Asia and our business partnerships."

The industry will slow down in the next one to three years.

Frost & Sullivan's aviation expert Ravikumar Madavaram expects a shift in geographical focus as well. "In Singapore and to a lesser extent, Malaysia, we have more or less reached saturation point because the penetration of budget air travel is already quite high," he said.

Greater opportunities exist in Northeast Asia, still a largely untapped market, and in Southeast Asian countries like Myanmar and Vietnam.

In the longer term, consolidation could take place, as it did in Europe years ago, with weak carriers swallowed by stronger players and the overall number of airlines shrinking.

As carriers seek market correction, travellers can expect fewer new routes. With possible flight cuts on existing routes, fares could go up, especially during peak months and in markets where there is limited competition.

It is not necessarily a bad thing, said Sobie, who added: "Passengers must realise that what we have right now, especially in Singapore, is an unsustainable situation. Low-cost carriers are losing money, there's just too much capacity.

"Super-cheap fares are great for a year or two but over the long term, yields must go up if airlines are to stay in business and it is in the consumer's interest that these carriers remain viable."

Budget airlines are also working hard to raise service standards. Airlines are making connections more convenient, even scheduling flights to minimise waiting times.

Wu said: "For me, flight timing and frequency are important. I'd rather pay a bit more to fly at a better time than midnight for example."

As Singapore's budget travel sector continues to evolve to meet customer aspirations without pushing carriers into the red, travellers can be assured of one thing.

For as long as budget carriers and competition exist, holiday-makers like Wu can continue to pack their bags several times a year, though maybe not six.